Yahoo 2004 Annual Report Download - page 23

increase our costs in defending such claims and our damages. The occurrence of any of these results could harm our
brand and negatively impact our operating results.
Acquisitions could result in operating difficulties and unanticipated liabilities.
We have made strategic acquisitions, including Inktomi Corporation (‘‘Inktomi’’) in March 2003, Overture in Octo-
ber 2003, 3721 in January 2004, Kelkoo in April 2004, and Musicmatch in October 2004. We expect to enter into
additional business combinations and acquisitions in the future. Acquisitions may result in dilutive issuances of equity
securities, use of our cash resources, incurrence of debt and amortization of expenses related to intangible assets. Our
acquisitions to date were accompanied by a number of risks, including:
• the difficulty of assimilating the operations and personnel of our acquired companies into our operations;
• the potential disruption of our ongoing business and distraction of management;
• the difficulty of integrating acquired technology and rights into our services and unanticipated expenses related to
such integration;
• the failure to successfully further develop acquired technology resulting in the impairment of amounts currently
capitalized as intangible assets;
• the potential for patent and trademark infringement claims against the acquired company;
• the impairment of relationships with customers and partners of the acquired companies or our customers and
partners as a result of the integration of acquired operations;
• the impairment of relationships with employees of the acquired companies or our employees as a result of
integration of new management personnel;
• the difficulty of integrating the acquired company’s accounting, management information, human resources and
other administrative systems;
• in the case of foreign acquisitions, uncertainty regarding foreign laws and regulations and difficulty integrating
operations and systems as a result of cultural, systems and operational differences; and
• the impact of known potential liabilities or unknown liabilities associated with the acquired companies.
We are likely to experience similar risks in connection with our future acquisitions. Our failure to be successful in
addressing these risks or other problems encountered in connection with our past or future acquisitions could cause us to
fail to realize the anticipated benefits of our acquisitions, incur unanticipated liabilities and harm our business generally.
Our failure to manage growth and diversification of our business could harm us.
We are continuing to grow and diversify our business both in the United States and internationally. As a result, we must
expand and adapt our operational infrastructure and increase the number of our personnel in certain areas. Our business
relies on our data systems, billing systems for our fee based and other services, and other operational and financial
reporting and control systems. All of these systems have become increasingly complex in the recent past due to the
growing diversification and complexity of our business and to acquisitions of new businesses with different systems. To
effectively manage this growth, we will need to continue to upgrade and improve our data systems, billing systems, and
other operational and financial systems, procedures and controls. In particular, as our premium and other services for
which we bill users grow, any failure of our billing systems to accommodate the increasing number of transactions and
accurately bill users could adversely affect our business and ability to collect revenue. These upgrades and improvements
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